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Amazon Roundup: Ad Tool, LatAm, Alexa, Whole Foods, TV, More

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It was an eventful few days at Amazon (AMZN - Free Report) with the company announcing its new ad tool, LatAm expansion plans, Whole Foods discounts for Prime, TV hire and more even as Alexa messed up.

Amazon Ad Tool

Amazon stopped buying a certain kind of ad from Alphabet's (GOOGL - Free Report) Google earlier this year. Now it looks like the company has a product to compete with it. Amazon says that its new ad targeting tool can follow shoppers across sites and woo them back to Amazon to make a purchase, according to its invitation to select sellers to try the new tool (that was seen by Bloomberg).

Of course this reduces their visibility into the ad placements and some sellers are understandably concerned that they therefore won’t be able to track which sites perform the best. But knowing Amazon, it may be expected to maximize their return on investment. Since Amazon has visibility into actual sales on its platform, it could be a win-win for sellers, while locking them into Amazon’s ecosystem.

AWS Expansion in LatAm

Amazon is looking to expand its presence in Latin America after setting up a data center in Buenos Aires last month. Officials met Argentine President Mauricio Macri late last year to discuss the country’s long-term digitization plans.

The meeting between Chilean President Sebastian Pinera, Economy Minister Jose Ramon Valente and AWS VP Teresa Carlson looks of a similar nature.

Carlson said, "We look for telecommunication industries that are progressive," she said. "We look for a government that really is thinking forward on the digitization of their economy in terms of education and creating new jobs." She indicated that Amazon’s investment in the region was with a long-term perspective, but she didn’t commit to anything just yet.

Alexa’s Unwanted Skills

Voice controlled devices can be a little more sensitive than you bargained for, as a Seattle couple discovered. In the incidence, Alexa recorded private conversation and sent it to someone on the friends list, with the couple only discovering what had happened after that person called to tell them.

Amazon said that Alexa misread commands thrice, to get activated, record what was going on and then send it to the contact. It also said that measures were being taken to ensure that such “unlikely” incidents didn’t happen again.

But Alexa getting activated by mistake, even on hearing the TV, happens all the time.

Recently, researchers from Indiana University, Bloomington, the University of Virginia and the Chinese Academy of Sciences discovered that it is quite easy to create false “skills” on both Alexa and Google Assistant that fooled the voice assistants into pulling up a program that sounds close enough to what the user wanted and then continue running when skills are switched, such as when the user wants to do something else. At such times, the device can continue listening on indefinitely or carry out other snooping activity.

Prime Members Get Whole Foods Benefits

Prime members will now get discounts at the organic supermarket. Whole Foods was always known for its responsible sourcing, but common customer complaints had to do with its extensive product line that lacked organization and standardization across stores, as well as its high prices.

After Amazon acquired the company last year, it wasted no time in dealing with both these problems. Not only was the product line trimmed, but discounts on a wide range of items were also offered. While many people still consider the stores (470 across the U.S., Canada and U.K., of which 463 are in the U.S.) expensive, the basket size has been increasing, according to Whole Foods co-founder and Chief Executive John Mackey.

According to CNBC, around 75% of Whole Foods shoppers are already Prime members, but less than 20% of Amazon Prime members are Whole Foods shoppers. So the opportunity is huge, but Amazon has to convince its user base that Whole Foods isn’t that overly expensive store they’ve known it to be in the past. This could take a little time.

Amazon’s TV Team Shakeup Appears Complete

The latest addition was Vernon Sanders, who left his position as EVP of current programming to join his former NBC colleague Jennifer Salke, who is now head of Amazon's TV and film studio. Salke replaced Roy Price, who was ousted because of a sexual scandal leaving the post vacant for several months, with Amazon Studios COO Albert Cheng heading the unit in the interim. Sanders and Cheng (who also remains Studios COO) will now co-head TV programming and report to Salke.

Amazon has made a lot of changes over the past month. The company has appointed Cheng as co-president and Sharon Tal Yguado as head of scripted; Marc Resteghini as head of drama; Nick Hall as head of alternative; and Georgia Brown as head of scripted series in Europe. The only folks continuing as before were Ryan Andolina and Gina Kwon, the co-heads of comedy; Heather Schusterm the head of unscripted; and Melissa Wolfe, the kids programming head.

Amazon Promises Diverse Board

Amazon has finally succumbed to pressure from employees, shareholders (Master Trust of the Service Employees International Union and CtW Investment Group) and the government that it will make changes to its all-white board (that does however include three women).

Amazon has previously said that it "seeks out candidates with a diversity of experience and perspectives, including diversity with respect to race, gender, geography, and areas of expertise." It now says that "this policy formalizes a practice already in place."

Amazon has agreed to follow the Rooney Rule, i.e. including women and minorities in the pool from which directors are chosen. While diversity is desirable, this kind of fixedness can create situations where capabilities become secondary to diversity.

Diversity advocates have said that including more women and minorities will improve decision making, reduce prejudice and so on, but there’s no real proof. A PwC survey of 900 board directors found 24% of directors don’t believe racial diversity has an impact on diversity of thought within boardrooms (Forbes).

Facial Rekognition Request

The American Civil Liberties Union (ACLU) and 40 other groups have written to Amazon demanding that government agencies be stopped from using its facial recognition tool called "Rekognition."

Its current customers include the city of Orlando and the Washington Country Sheriff’s Office in Oregon, which has built a database of 300,000 mugshot photos to use with Rekognition. Law enforcement would find it a useful tool to track law breakers and come to more accurate conclusions, but the excitement stems from the belief that they would unnecessarily track anyone they choose to simply because he/she happened to be an immigrant or from a minority community.

Amazon’s statement read “Our quality of life would be much worse today if we outlawed new technology because some people could choose to abuse the technology,” and, “Imagine if customers couldn’t buy a computer because it was possible to use that computer for illegal purposes.”

 

Recommendations

Amazon shares have a Zacks Rank #1 (Strong Buy). Groupon (GRPN - Free Report) , Expedia (EXPE - Free Report) , PetMed (PETS - Free Report) , TripAdvisor (TRIP - Free Report) are other buy-ranked stocks. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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